How Digital Labor Is Transforming IT

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Robotic process automation has the potential to usher in a new era of innovation, data analytics and significant labor cost reductions.

By Frank Casale

Ladies and gentlemen, I’d like to introduce ShiBLA. It’s not a character from Greek or Roman mythology, but it does bear good news for CIOs who are seeking greater cost savings than their current onshore, near shore or offshore relationships can deliver.

For more than 20 years, large, successful businesses have built their operating models on the benefits of global labor arbitrage. We know that the economics of labor arbitrage work because the models lower the cost of production of goods, services or technologies. It’s a fundamental tenet of Business 101.

Enter robotic process automation (RPA), which is the application of software to perform high-volume business process and IT functions. Deploying intelligent software to perform large-scale general knowledge process work will radically change the old labor model—and the old math—to lower costs in a new way, and will usher in the next era of lean and efficient business models.

When More Work Doesn't Mean More Workers

ShiBLA is derived from the phrase "shift beyond labor arbitrage." Don’t think sci-fi. Think digital labor. Even better: think a possible 25-40 percent labor cost reduction in both IT and business process environments.

ShiBLA marks a new period in time when more and more businesses, led by their CIO, will introduce RPA and upset a long-standing equation: more work = more people. Alternately, its use will enable workers, so they can be moved to more impactful and value-producing roles. At one top U.S. bank that recently built an automation center of excellence, for example, RPA can resolve more than half of all IT-related incidents without human intervention, thereby freeing the IT staff to work on business-advancing initiatives.

Robotic process automation will radically simplify entire areas of the CIO's province, including customer analytics, data mining, social media analysis and the warehousing of big data. As companies transition to robotic process automation, they will aggressively re-engineer themselves with these smart systems, thereby reducing the need for remote labor pools and, at the same time, improving business processes and executing sophisticated and targeted data analytics with increased speed, quality and scalability.

Since launching the Outsourcing Institute more than 20 years ago, I’ve seen many business trends appear and disappear. The shift beyond labor arbitrage as it relates to RPA will dramatically and permanently change the business and pricing models in the ITO and BPO arena, I believe. RPA can provide a great advantage to CIOs—and be dangerously disruptive to businesses that do not make the pivot.